Story ID: 029Aug19
EC Approves Flybe Sale to Connect Airways
By: Gregory Polek
Caption: Flybe will now operate under the Virgin brand.
Word Count: 431
The European Commission has issued merger control clearance for Connect Airways’ acquisition of Flybe and Propius Holdings as well as its investment in Stobart Aviation unit Stobart Air, Connect Airways said in a statement released on July 5. The sale of Flybe to Connect Airways—a UK limited company of which Stobart Aviation owns 30 percent; Virgin Travel Group another 30 percent; and DLP Holdings, a Luxembourg company wholly-owned by funds managed by Cyrus Capital Partners, the remaining 40 percent—closed on February 21.

Originally announced on January 15, the sale includes Flybe Limited and Flybe Aviation Services Limited. Connect Airways and Flybe will operate under the Virgin brand while retaining the existing AOCs.

In a statement, the EC said it investigated the effect of the proposed transaction on the market for air transport of passengers on routes from British airports to other European airports as well as some intra-UK routes. The commission said it found that the transaction, as initially proposed, would have led to quasi-monopolies on two direct European routes, namely Birmingham-Amsterdam and Birmingham-Paris.

This quasi-monopoly situation would result from Air France-KLM acquiring indirect control over Flybe, via its joint control over Virgin Atlantic. The Commission approved the joint acquisition of Virgin Atlantic by Air France-KLM, Delta, and Virgin Group in February. The Commission also noted that entry of competitors into those routes would prove difficult, considering the congestion at both Amsterdam Schiphol and Paris Charles de Gaulle airports.

To address the EC's competition concerns regarding the Birmingham routes, Connect Airways will release five daily slot pairs at Amsterdam Schiphol and three daily slot pairs at Paris Charles de Gaulle to competing airlines. 

With Connect Airways assuming full management control of the business, the company’s CEO, Mark Anderson, and the leadership teams from Flybe and Stobart Air will now concentrate on implementing plans to expand Flybe’s regional network and Stobart Air’s franchise business, it added.

The combination of Flybe with Stobart Air results in a fleet of almost 100 aircraft, mainly De Havilland Dash 8-400s, of which Flybe stood as the world's largest operator. The rest of the combined fleet consists of Embraer 195s, 190s, and 175s, several ATR 72-600s and a single ATR 42-600.

A consistently growing but often financially troubled regional airline, Flybe grew out of the rebrand of Jersey European Airways as British European Airways in 2000. A significant milestone came in March 2007, when Flybe bought BA Connect from British Airways, although the latter retained services out of London City Airport.
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